Quote:
Originally Posted by Papa_lecki
I think the home owner has the liability. The CDD is just the collection vehicle, they collect from the debtor (homeowner) and pay the debtee (the holder of the bind investment).
If a homeowner defaults on their bond, the CDD downs pay it, the next owner of the house does.
|
Here is a quick and basic view of these bonds from the standpoint of a bond investor. I understand this is a different view than how a homeowner views things, but it helps one understand the whole picture from a different perspective.
These are tax free municipal bonds being issued by the CDD’s. There are basically two types of municipal bonds, revenue bonds and general obligation bonds. General Obligation bonds (GO’s) are backed by the full ad valorem taxing powers of the issuing municipality. Revenue bonds are backed by a pledged specific revenue source, such as a toll road or utility charge. These bonds are technically revenue bonds issued by the CDD’s. Investors in the bonds look to the CDD’s ability to pay the bonds obligations through funds raised by a non ad valorem special tax assessment. This special tax assessment represents a first lien on property holders (homeowners bond balance) and is the sole revenue source backing the creditworthiness of the bonds from an investors standpoint. The credit worthiness of the bonds is based on the stability of the underlying special assessment tax base as well as the revenue generated from the special assessment being sized adequately to sufficiently pay all required debt service obligations in a timely fashion.